Martin von Willebrand's Blog

Last Saturday, I was triggered by a tweet from @osma (Osma Ahvenlampi) to discuss the most relevant key legal questions for startups. As it in turn triggered several comments, all of which added to the picture, I started to think about collecting the tweets here.

So this discusses the most important legal and relationship questions each startup entrepreneur and founder will need to concentrate on. Preferably sooner than later, in order to move focus forward (instead of the present or the past).

@osma triggered this:

Thanks for all the congrats! This is where the work starts.. cc @metrify @pyryis @KristoOvaska @triekki (@osma, Sat 12 May 13:40)

Based on this and some earlier tweets I assumed the Metrify founders (Kristo Ovaska – @KristoOvaska, Osma Ahvenlampi – @osma, Tuomo Riekki – @triekki, Pyry Åvist – @pyryis) had signed a shareholders agreement (often referred to as a SHA), possibly transferred existing assets to their company, perhaps also formally founded the company. So:

Good to get incentives formalised, clear. Drives work! RT @osma Thanks for all the congrats! Work starts… cc @metrify @pyryis @KristoOvaska (@mvonwillebrand, Sat 12 May 16:21)

@mvonwillebrand yes indeed! Get the home base in shape before the real attack! cc @osma @metrify @pyryis @triekki (@KristoOvaska, Sat May 17:15)

Exactly! RT @KristoOvaska @mvonwillebrand yes indeed! Get the home base in shape before the real attack! cc @osma @metrify @pyryis @triekki (@mvonwillebrand, Sat 12 May 17:33)

“Get the home base in shape before the real attack!” – That’s the whole point. But it begs the question what is the right moment to do so. So:

Startups: One trap for beginning entrepreneurs is to fail in agreeing early, clearly what the incentives, ownership %s are. Slows down… (@mvonwillebrand, Sat 12 May 16:26)

Startups: early incentives for founders are mostly based on ownership %s of a company, so founding formally helps. (@mvonwillebrand, Sat 12 May 16:26 – 16:29)

Startups: then again, its some paperwork. When balancing when to formally found, remember the point on incentive clarity. (@mvonwillebrand, Sat 12 May 16:30)

So the key point here is: founders should agree early on who owns and how much. I have seen many times a startup or development project linger on and on without clear focus. Perhaps a portion of the Finnish nature makes it difficult to speak about money and ownership. But leaving the question on ownership open will slow down your team. Team members’ focus will be distracted by “is this actually my project or his/hers?”. Read the rest of this entry »